Are Barcelona still in financial trouble?

Barcelona finished the 2021 season in

deep financial distress they had to take

several million euros worth of

impairment losses and with a squad

impacted by years of poor recruitment

they were forced into releasing Lionel

Messi to meet La liga's ffp mandate a

change in leadership ensued and multiple

Financial levers were deployed to

address the bleeding most notably the

sale of a 25 stake in their La Liga TV

rights for the next 25 years so a couple

of seasons have passed since then but

have things really changed are Barcelona

still in financial distress

Barcelona's Financial predicament a

couple of seasons ago was best

summarized by Joanna Porter who

described predecessor Jose Bartimaeus

spending as too much and at the speed of

light leaving them in a dramatic

financial crisis he called it a dreadful

inheritance at the time but he reassured

fans that he was not scared he said the

situation is dramatic but we have good

news the Strategic plan based on our

credibility and experience on the assets

that Barca have makes this situation

temporary but was it actually temporary

well let's investigate now it's

important to start by understanding

exactly what laporta and his team did to

try and rectify the situation that most

notably three things firstly they sold

25 of their domestic TV rights to U.S

investment firm 6th Street for the next

25 years in a deal totaling over 500

million euros this is basically giving

up a sizable chunk of TV revenues for

the next quarter of a century which

would add up to a lot more than 500

million Heroes over that time in order

to book higher revenues today now this

was necessary to comply with LA liga's

ffp rules and enabled them to raise the

allowed spending limit so that they

could spend 150 million pounds last

summer to sign the likes of Robert

Lewandowski rafinia and zurichunde and

complete and register free transfers for

Andres Christensen from Cassie Hector

Baron and Marcus Alonso secondly they

sold a 49 stake in their Media Company

Boston Studios over two separate

transactions totaling around 200 million

euros and thirdly they signed a huge

long-term shirt and Stadium sponsorship

deal with Spotify worth 280 million

euros

in addition to this they managed to

negotiate their own player contracts

asking players to defer wages mandor

take dramatic pay cuts to stay at the

club Gerard PK being the most noteworthy

example

most ambitiously they closed

renegotiations recently on a 1.45

billion Euro financing deal to renovate

their iconic camp now Stadium the deal

is around 30 years long with Barcelona

making the final repayments in 2052.

this will doubtless impact cash flow and

the interest payments buses annual

interest payments are already the

highest in Europe at 30 million euros

will affect profits for the better part

of the next three decades we will see

the full impact of this when The

Season's 2223 financials are released

later this year but it is likely to be a

sizable drain on the club's resources

the club does estimate however that the

new stadium will generate roughly 200

billion euros worth of additional

revenues each year through sponsorship

and naming rights ticketing catering VIP

boxes Hospitality meetings and events so

there's lots of steps being taken then

what has been the impact and how a

Barcelona positioned now

well in the 21-22 season financials

released in September last year the

impact of some of these levers showed

and the high one-time costs of 2021

especially massive player impairment

costs and one-time Provisions because of

tax cases and lawsuits also disappeared

Barcelona finished with a negative 7

million euro ebitda in 2122 which was

still significantly better than the

negative 63 that they had at the

previous season the first tranche of TV

rights sale impact kicked in with an

additional 400 million euros expected to

flow through into the 2022-23 financials

the 200 million euros worth of basa

Studios stake sale will also flow in

2223

and Barcelona have not ruled out the

deployment of more such levers including

a rumored 49 stake sale in Barca

licensing and Merchandising which would

be worth about 300 million euros player

sales are another lever that the club

might yet exploit especially for

potentially high value assets such as

Frankie DeYoung years of poor

recruitment though has impacted revenue

from player sales and Barcelona's

performance in this regard has been poor

in the last five years

their profit after tax in 2122 was 98

million pounds which was comfortably the

highest in La Liga the club estimates

274 million pounds of profit after tax

in 2223 with the Assumption they'd

reached the quarterfinals of the

Champions League crashing out in the

group stage and then losing to

Manchester United and the Europa League

was not a full scene

in the present day then we'd argue that

while basa are seeing short-term relief

with these levers kicking in the

longer-term financial health of the club

is still not good

snowed under by debt the club also has

an enormous wage Bill and are reportedly

around 200 million euros over the La

Liga ffp cap they are thus unable to

currently register new contracts signed

months ago with Defender Ronald orejo

and midfielder gavi both key players for

their future in more positive News high

earners Sergio busquets and Jordi Alba

will be leaving the club this summer and

zero PK has already retired

nevertheless they cannot keep finding

one-time Innovative Financial leavers

and will eventually need to fix the

operating engine Barcelona had the

second lowest operating profit in La

Liga at negative 146 million Euros which

is a typical sign of poor financial

health so while fans are rightly

celebrating their La Liga win it has

helped paper over the cracks that

continue to exist and in some cases grow

wider there's plenty of work left to do

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